Our health, ourselves<br>Yet feds have HSAs under the knife

To get a clearer picture of the competing visions for
health-care reform, Americans need look no further than the surgery
some in Congress want to perform on patient choice.

The disagreement, in Washington as well as on the campaign
trail, is about whether consumers ought to have more or less say in
their own health care.

Some pre-op background: As part of the Medicare Modernization
Act of 2003, Congress created health-savings accounts, or HSAs. The
idea was to give patients an affordable alternative to the high
insurance premiums of traditional "first-dollar" coverage.

The HSA option allowed consumers to choose a low-premium
insurance option they could couple with a pre-tax savings account
to cover "qualified" health costs.

Of course, no serious health-policy analyst believes HSAs are a
panacea for all that ails America's health-care system. But the
accounts were a welcome step in the direction of patient-centered
health reform.

More than 6 million Americans are enrolled in HSA-eligible
health plans. And the popularity of these plans is growing, in no
small part because patients can determine how much of their money
to spend today, or save for tomorrow, for health-care expenses. In
short, HSAs allow patients to make prudent decisions for
themselves.

Yet some in Congress see HSAs differently. These critics don't
trust consumers to manage their own money. For them,
patient-centered health care is either "too hot" or "too cold."

Here's how this Goldilocks Theory works: The critics first say
account balances are too low to cover the higher deductibles
carried by low-premium health plans. They object that patients
aren't protected from catastrophic expenses, or might decide to
forgo necessary care.

Yet these same critics proceed to argue HSA balances are too
high because patients are saving too much. They say the money isn't
going toward health care today, and the accounts are merely tax
havens for the wealthy.

So are account balances too low or too high? And what amount is
"just right?"

HSA detractors in Congress don't know these answers. But for
some reason they seem to think politicians, insurance companies and
policy nerds are better suited to call the shots on how you spend
your money. This reasoning reflects an underlying assumption that
patients can't be trusted to effectively control their own
health-care decisions.

But the congressional critics know better than to put their
cards on the table. So rather than attack HSAs directly, they
create a diversion over account balances.

The House of Representatives has passed a measure requiring
consumers to "substantiate" in advance that withdrawals from their
HSAs are made for "qualified medical expenses." The Senate should
recognize the folly of this approach.

Why subject patients to more burdensome government regulation
that adds paperwork, drives up administrative expenses and makes
the accounts less desirable?

HSA opponents contend patients are under no obligation to use
withdrawals - their own money, remember - for health care. This is
a distraction, not a real concern. At least 90 percent of account
funds go toward qualified medical expenses, according to the
Government Accountability Office.

And our friends at the Internal Revenue Service deem misuse of
HSA funds to be illegal, meaning account holders are already
subject to oversight. There's nothing illegal about a consumer
spending money on "unqualified" expenses, either, so long as he
pays taxes on that amount.

The real reason HSAs are under the knife of the critics? Some in
Congress are at ideological odds with patient-centered health care.
The dispute shows, yet again, they want to preserve the worst
features of the status quo.

Fortunately, Americans have an alternative. It's a better vision
of health reform - one that gives us more direct control over
spending, allows us to pick the coverage we want and lets us carry
that plan from job to job.

This approach requires Congress to fix a broken, unfair system
by reforming the tax treatment of health insurance - not by
second-guessing how patients spend their health-care dollars. In
other words, a real solution requires the kind of hard work we
expect our leaders to do.

Gregory D'Angelo
is a policy analyst at the Heritage Foundation's Center for Health
Policy Studies, where Ryan Lynch is a graduate
fellow.

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